Can your prepaid base pay a reward?

Mobile service providers have traditionally focused bulk of their churn management and retention efforts on the post-paid customer segment. Prepaid has at best been an afterthought from a customer perspective. However, mobile operators now need to re-assess their prepaid strategies as the prepaid segment is the fastest growing segment worldwide, and churn in this segment, especially of high-value customers will hurt profitability.

As published before in this blog and based in our experience, an effective prepaid management program can increase prepaid revenue by 3 to 5 percent and/or reduce prepaid churn by 5 to 8 percent.

Fran has just come back from a central European country to discuss this topic. He met the CCO of a triple play operator and explained our prepaid management framework and how do we think we can support them in defining a successful prepaid strategy. A 2 hours meeting can be summarized in the following slide:

Prepaid management framework

As commented before, the prepaid revolution largely drove the swift growth of mobile subscribers, opening up a huge swath of the low-end market for operators, but prepaid is maturing. The industry must find new ways to sustain growth and profitability, namely by achieving a sharper focus on customer lifetime cycle management.

However, due to the lack of basic customer information, prepaid subscribers are often a mystery to mobile operators – but they don’t have to be. By mining detailed usage patterns, an operator can micro-segment its prepaid customer base into hundreds of relevant segments based upon usage characteristics. Operators can then target specific customer groups with micro-promotions that are more likely to result in increased usage with little cannibalization risk.

The following hot topics are essential for a successful prepaid management strategy: ARPU stimulation, Multisim management, Migration management and Inactivity turn-around.  Each of these topics can be addressed following a six-steps approach:

Prepaid management phases

We have successfully tested these prepaid management methodologies in different markets, having achieved outstanding results in most of them. We can firmly affirm that a good prepaid management strategy bring a significant pay off to the operator. Now, the question is: How should the operator behave with their customer base to give this pay off back? Will be a subject of a future post.

Best regards, CVA. Flying to France

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